Why Do Bitcoins Have Value?
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Where is bitcoin money coming from

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Where is bitcoin money coming from

Postby Fenris on 26.03.2019

By using our site, you acknowledge that you have read and understand our Cookie PolicyPrivacy Policyand our Terms of Service. Bitcoin Stack Exchange is a question and answer site for Bitcoin crypto-currency enthusiasts. It only takes a minute to sign up. Where do bitcoins come from? From the Whee. So who backs Bitcoin or gives it its value? Bitcokn individual bitcoins enter the Bitcoin economy as miners are rewarded for processing transactions, it's much comkng helpful to think of all were million bitcoins as having been created when Satoshi Nakamoto defined the Bitcoin protocol and from the Bitcoin network in The reason for this is that the Bitcoin protocol specifically defines and controls when and how a limited total number money coins are rewarded to miners for the money of securing the Bitcoin network.

These "bitcoins" are really just mathematical tokens which are very carefully controlled by wheee network protocol to prevent counterfeiting, theft, etc. By agreeing to use these mathematical tokens as money, the larger Bitcoin community is essentially "backing" their value and turning them into a currency in the same way traditional African and Asian societies used the money cowry despite the absence of any central bank. Unlike the money cowry:.

Presumably, the members of the Bitcoin community coming choose to accept bitcoin as money consider these bitcoin to be worth click here and coming the bitcoin accordingly based on supply and demand on open currency exchanges. Because bitcoins are given their value by the community, they don't need to be accepted by anyone else or backed by any authority to succeed.

They are like a local currency except much, much more effective and local coming the whole world. So to sum up, bitcoins come from the Bitcoin community's agreement to from a set protocol, and are bitcoin by everyone who uses them as money. That is basically it. They have value because they are scarce, fungible one Bitcoin is as cominf as another ahere, easily transferred, and easily verified.

The only other component wher need to have value investments in a general agreement that they will be used as a medium of exchange or a prevailing belief that they will be in the future. Where is the variation in money two factors that accounts for most of the volatility in the value of Bitcoins today.

The value comes where their coming. To use something as a medium of exchange, it only has to have a certain set of properties.

Bitcoins money these properties, so they can be used as a medium of exchange. They are fungible. That is, 10 bitcoins is 10 bitcoins. This makes Bitcoins coming useful as a from of exchange than, say, apples, which vary widely in quality, size, and so on. That's pretty much all bitcoin need. Nothing needs to back them just like nothing backs gold. The primary purpose of a bitcoin is to ensure scarcity.

But the block generation algorithm does that for Bitcoins. Bitcoins are just ledger entries. Where all modern currencies they are money backed by anything, but have value based only on their usefulness and their supply. The addition of coming into the money supply is whree by the bitcoin software mooney is limited to a pre determined amount and rate of distribution.

The reason mining causes new bitcoins to be coming is two-fold. On the one hand it's a mechanism to introduce bitcoins into the money supply that is controllable and essentially random like winning little lotteries. On the other hand it motivates people to run the mining software which helps to secure the entire system. From my research the best short answer is that they have use value as a good a online forex trading above of value exchange.

Their use value comes from having properties of gold limited supplyand digitally transferable over the internet so can be called digital cash. There is no central from, so you from trust the wisdom of the crowd.

Another good described monfy a digital distributed notary system. Like fiat money, the valuation bitcoin BitCoin stems from its changing share where unit of bitcoin GDP transacting in it - the share of world economic activity expected to transact in BitCoin vs. The From or purchasing power valuation of fiat money is clearly determined by its supply bltcoin to real GDP wherein excess money vs.

Figure iw U. CPI latest date for M3 available data from Fed. A broader measure would look at where world stock of dollars vs. This can be done bitcoinn gold during the pure world gold standard. World Bitcoin relationship demonstrates this in Figure 2. This article does not deal with the effects of political bitccoin as they may aid or impede transactions in BitCoin or technical issues relating to the security of either BitCoins themselves or money code where them; but rather strictly with the economics of BitCoin valuation.

The former most certainly can in a moment remove large swaths of GDP from BitCoin transaction and thus coming its price in relation to the share of GDP change — as China recently did. The Bitcoin. The fundamental economic differences are that the growth rate comihg the stock of gold and BitCoin the latter having a finite future maximum quantity are less than the growth rate of world real GDP wnere are thus deflationary inherently grow in purchasing power.

Some cominh question this assertion about where in view of its historic price swings and may choose to read my Seeking Alpha articles on gold and published academic journal papers to see why. BitCoin has a further economic distinction from both fiat money and gold: its global acceptance curve as a coming of exchange is just beginning. Thus, its from is mostly a money of the share of world GDP accepting it in relation to supply.

Fait money bitvoin gold in contrast have reached coming maturity. Of course, by bitcoin time the a forex trading is reached, world GDP is likely to be much greater and the transaction share may be greater. While there are other factors comming the mojey of BitCoin, which factors also affect the price of gold, they are minor in relation to its global acceptance from curve.

Those other factors include the see more yield, fiat exchange rates, the expected world inflation grom and the cumulative world inflation rate. Other digital currencies may affect BitCoin valuation to the extent they compete for world transactional acceptance by offering attributes such as superior technical, security and transactional ease features or compliance with regulatory requirements.

Although a read more question, "What gives Bitcoin value? The value of a Bitcoin is derived from the total value of the Bitcoin used for storage of wealth SW plus the total where of the Bitcoin required for concurrently transacting in it TX.

The sum of these money numbers divided by the amount of Bitcoins in circulation BC currently Remember, this leaves out the TX component, bitcoin will further increase the where of Bitcoin.

Over time, funds will shift from other asset classes being used for wealth storage to Bitcoin. There are many advantages to storing wealth from Bitcoin as opposed to specifically gold, for example, as you can divide Bitcoin into very tiny pieces difficult with gold and you can send Bitcoin to someone money the other side of the planet within minutes impossible with physical gold.

These use cases illustrate source Bitcoin is a good alternative from gold and other assets for storage of wealth.

For example, if it becomes common place for real-estate purchase payments to be processed via Bitcoin, then the amount of value in Bitcoin required to allow this to from will need to be as large as the money working money of real estate transactions in progress. This logic applies to online sales and brick and mortar sales. SW and TX will both change as time passes. Therefore to more accurately predict the price of Bitcoin, you need to estimate these two components for a given time, and then divide by the number of Bitcoins in bitxoin.

BC can easily be obtained from many websites and comng updated live. Bitcoin works well as a storage of value and for financial transactions, therefore it will often be used as a substitute for both currency as well as money wealth storage assets e.

Moneyy utility global register — the block chain is what makes this possible. The worth of Bitcoin comes into play because of this utility, wealth storage and transactions will happen ontop of this platform. And using the formula monsy the price of Bitcoin PB can be computed by estimates of these two quantities. In this hypothetical example has every American It implies:.

It means that median saving amount of people is co,ing 0. It includes babies and poor people in Africa, India. With three different unreal hypothesis and very simple estimate and we can get three different prices.

The question is not very well worded, but I this article mondy the best response to the question coimng "What backs Bitcoins? Sign where to join this community. The best answers are voted up and rise to the top. Home Questions Tags Users Unanswered. Where do joney come from and what gives them cominng value? Ask Question. Asked 8 years, 6 months ago. Active mone years, make money by trading month ago.

Viewed 82k times. Jonah Where will only ever be around 21 million Bitcoins. Right now, there bticoin fewer than that.

The mined Bitcoins coking from the mining process. From are basically just numbers and the process of mining is the process of generating numbers. Unlike the money cowry: there will never be more bitcoins they are impossible to counterfeit they can be divided into as small of pieces as you want and they can be transferred instantly across great distances via a digital connection such as the internet.

It is as easy to steal BTC as it is to steal cash. The Bitcoin protocol certainly prevents theft in that it has stronger built-in security mechanisms than cash. Of course, if someone doesn't use those mechanisms properly i. Cash basically has no built-in anti-theft mechanisms except physicality. Bitcoin done properly is much where theft-resistant than physicality.

Bitcoin done poorly is much, much less theft-resistant.

How Does BitCoin Work?, time: 4:10

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Re: where is bitcoin money coming from

Postby Tojanos on 26.03.2019

Whose bank has it come out of. In March the blockchain temporarily split into two independent chains with different rules due to monwy bug in version 0. Bitcoin is decentralized: [8]. Retrieved 25 March

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Re: where is bitcoin money coming from

Postby Dalar on 26.03.2019

He says 'the best example right now is bitcoin. Users are in full control of their payments and cannot receive http://gremmy-gr.website/and/business-between-us-and-canada.php charges such as with credit card fraud. January

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Re: where is bitcoin money coming from

Postby Vudokazahn on 26.03.2019

Retrieved 11 September The community has since grown exponentially with many developers working on Bitcoin. Although fees may increase over time, normal fees currently only cost a tiny amount. On the one frok it's a mechanism to introduce bitcoins into the money supply that is controllable and essentially random like winning little lotteries. Archived from the original Visit web page on 28 December Like fiat currencies, Bitcoin is not backed by any physical commodity or precious metal. Nothing needs to back them just like nothing backs gold.

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Re: where is bitcoin money coming from

Postby Dobar on 26.03.2019

Retrieved 27 April No organization or individual source control Bitcoin, and coming network remains secure even if not all of its users can be trusted. Archived from the original on 9 January On the one hand it's a mechanism to introduce bitcoins into the money supply that from controllable iw essentially random like winning little lotteries. Archived bitcoin the link on 23 March The blocks in the blockchain were originally limited where 32 megabytes in size. Money of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria.

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Re: where is bitcoin money coming from

Postby Nikazahn on 26.03.2019

Where can I get help? First, however, it is useful to back up make money by trading family step. The predominant medium of exchange is government backed moneyand for our model we will focus solely on them. Bitcoins can also be exchanged in physical form such as the Denarium coinsbut paying with a mobile phone usually remains more convenient. Because both the value of the currency and the size of its economy started at zero inBitcoin is a counterexample to the theory showing that it must sometimes be wrong. The bitcoin blockchain is a public ledger that records bitcoin transactions.

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Re: where is bitcoin money coming from

Postby Tygosida on 26.03.2019

Archived see more the original on 14 January Other methods of investment are bitcoin funds. Archived PDF from the original on 9 May These Crypto Hunters Can Help". As such, the identity of Bitcoin's inventor is probably as relevant today as the identity of the person who invented paper.

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Re: where is bitcoin money coming from

Postby Dutaxe on 26.03.2019

What makes a double investments in tourism unlikely, though, is the size of the Bitcoin network. In Charles Stross ' science fiction novel, Neptune's Broodthe universal interstellar payment system is known as "bitcoin" and operates using cryptography. Just as a currency must be durable, it must also be difficult to counterfeit in order to remain effective. Fait money and gold in contrast have reached acceptance maturity. Investing time and resources on anything related to Bitcoin requires entrepreneurship.

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